If you’ve played a phone game any time in the last several years, you’ve surely seen the option to make in-app purchases – and if you’re a parent, there’s a good chance you’ve had to dispute purchases made unknowingly by a small child.
These purchases are also known as microtransactions, and they’ve been a transformative tool for the gaming industry, leading overall profit growth. Indeed, at this point, such purchase options are an inescapable element of game environments, but do you use them? If so, you’re in good company.
As reported in June, Apple alone brought in more than $600 billion from consumers and advertisers via their app store in 2023, with the company taking a cut of between 15 and 30% of software or digital goods purchases, depending on company size. Though only a percentage of this is made up of in-app purchases, such metrics demonstrate a larger trend in how we approach consumer goods today.
Still, as appealing as in-app purchases are to solo gamers trying to meet a goal, for those engaged in multiplayer gameplay, the option to buy added tools and features is contentious. Instead of a game of skill, in-app purchases may be transforming these platforms into credit card competitions, with the biggest spenders coming out on top.
Who Buys And Why?
In order to understand whether or not in-app purchases impact the gaming experience, and whether their influence is primarily positive or negative, we first need to get a better grasp on who makes these purchases and why. Generally, new gamers are focused on learning the controls, making connections, and socializing as they adapt to these digital worlds.
Compared to new gamers, more experienced gamers are more likely to make in-game purchases to enhance their experience or be more competitive, but even gaming frequency and ability are poor predictors of in-app purchases.
In fact, the greatest determinant is actually in-game sociality. Giving in-game gifts increases the likelihood a gamer will spend real money in a gaming environment, and young people may make purchases to keep up with friends, as can be seen with the purchase of Fortnite skins and similar add-ons. Teens are the biggest in-game spenders, followed by women in their 30s and 40s, who make up a larger proportion of gamers than most people realize.
While the above examples of in-app microtransactions may seem harmless, at least one group can be seen as being victimized by these offerings: those with a history of gambling addiction.
Though in-app purchases aren’t the same as gambling or games of chance, in that the buyer receives a digital good, many experience the same cognitive reward. With various forms of digital addiction on the rise, this is a real concern.
Though we have a clear understanding of what motivates most in-app purchases, another important matter to evaluate is why designers offer this function, especially in the face of concerns that they may compromise the in-game experience. So, what’s behind this function? Simply put, it’s hard for developers to charge up-front for games when there are so many free options available, but they still need to make money on their digital products. And once players make an initial purchase, they keep buying.
Research evaluating in-app purchases concludes that players who make an in-app purchase just once are six times more likely to make a subsequent purchase. This also ties into the ways we think about product investment. There’s no reason to feel invested in – to keep playing – a free game; if you get tired of it, you can just delete it. If you’ve repeatedly spent money on added “products” or features, however, you’re more likely to stick to it.
Harnessing The Social And Financial
To maximize in-game purchases without compromising the gaming experience by allowing players to pay their way through the ranks, one approach developers have taken is to embed the purchase process into the social elements of gameplay.
As noted above, social or community-oriented reasons lead the way when it comes to rationalizing in-game purchases, and when the two are combined, developers are better able to drive purchases while giving players novel experiences, often in the form of social events like tournaments or group tasks.
From group play games like Among Us, which became a surprise hit during the pandemic, to tournament or festival play in augmented reality games like Pokemon Go, socially-driven opportunities are central to the growth of in-app economies. Furthermore, with gamers maturing, it’s more likely that players would be able to travel or invest in larger-scale activities, as opposed to small in-app add-ons.
The Competitive Edge
So, what about the competitive edge? Despite the fixation some players have on how in-game purchases impact the gaming experience by, for example, equipping some players with better tools or helping them meet goals more quickly, there are also many players who ultimately pay little attention to this issue.
These players may even find that, whatever others do, making in-app purchases would compromise their own experience of the game, and that’s all that really matters to them. On the other hand, those who treat gaming as a social thing primarily make purchases to enhance that aspect of the game, rather than outperform their opponents.
As for developers, they will continue to hone their UX practices in order to increase in-app purchases, even as free games continue to dominate the app store landscape. What these in-game additions will look like will vary widely, but they are part of growing in-app economies more generally. Advertising income just can’t keep up with modern game design costs.
Whatever appearances indicate, buying game progress isn’t the goal of in-app purchases, and it isn’t what motivates the vast majority of players. Instead, in-app purchases help players connect with each other, emphasizing the social aspect of gaming, even for those who only play on their phones.
This is something outsiders don’t necessarily understand about gaming and which doesn’t motivate all gamers, but which will be increasingly important to those who enjoy video games as the mechanisms become more advanced and cooperative or competitive real-time play advances in quality.